Credit Suisse AT1 bondholders will not be compensated for the redemption of these instruments


Credit Suisse’s AT1 bondholders will not be compensated after the Credit Derivatives Resolution Commission (CDDC) has determined that the entity’s Swiss state-sponsored merger with UBS was not an “event”. credit” and that such investors do not have priority over other instruments in the fray.

This commission, which settles disputes in the derivatives market, has reached the unanimous conclusion this Wednesday that there was no “credit event due to state intervention” and that, after reviewing the classification clauses of AT1 bonds, they do not they merit preference over a subordinated bond that matured in 2020. Therefore, the latter were priority creditors over AT1 bonds in the order of priority.

Similarly, the Swiss Financial Market Supervisory Authority (Finma) already defended at the end of March the decision to fully amortize the AT1 capital instruments issued by Credit Suisse since this is contemplated in the bond issuance prospectuses and the regulations of the Swiss Federal Council in the event of a “feasibility event”, particularly if there is extraordinary support from the Government.


For its part, UBS has reported this Wednesday that it estimates an adverse impact from the merger with Credit Suisse of some 17,000 million dollars (15,630 million euros) in relation to impairments in the value of assets and litigation.

Specifically, some 13,000 million dollars (11,953 million euros) will come from “fair value adjustments in financial assets and liabilities”, while the negative impact due to litigation and regulatory costs would amount to about 4,000 million dollars (3,678 million euros). ).

In the documentation, UBS recalls that the consideration of the merger was determined on the basis of discussions with the Swiss Government and was agreed with Credit Suisse after negotiations “in emergency circumstances”, during which “a ‘due” could be made. limited diligence” to fully consider Credit Suisse’s liabilities and weaknesses.